Customer Reviews

Pounce: How to Seize Profit in Today's Chaotic Markets

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2 star:		(1)
1 star:		(0)

 

 

Let's get one thing straight. Ken Stern knows a lot about the stock market. He also knows a lot about marketing books.

Now that we have that out of the way, be warned. This is not a simple book or a simple system. Mr. Stern offers his P3 system based on Valuation, market sentiment, and trends direction.

Let me explain something to Mr. Stern. Do you really think that any sizeable number of investors, having seen their retirement savings erode by 30-50%, would use your system? No. Only those who haven't lost anything will be taken in by this book. And, given the complexity of the system and the blind faith needed to implement it CONSISTENTLY (another Stern word), would require more moxie than most of us have.

Stern says that the herd is stupid and usually gets it wrong. However, he has times when he recommends running with the herd. There will be more running away with the herd when things get tough, and his methods will be like all the others, dust left behind.

Mr. Stern's methods are supposed to logical and rational, eliminating emotion from your investment decisions. Just do the screens once a month, pounce at will, and watch the money grow. However, watch out for the Great Void, because you'll need to adjust. By the way, there's no way of knowing if we are in a Great Void or at a bottom right now. Logically, you could flip a coin.

To those of you who are new to investing, let me explain something. Neither Ken Stern, nor Jim Jubak, nor Jim Cramer, nor Warren Buffett, nor anyone else with experience does it this way. We invest our money and then bite our nails, because there are fallacies in EVERY system. And here is the important part:

We have recently seen an erosion of wealth in the world economy rivalling that of the depression era. There is a good probability, perhaps a very high probability, that the stock market as a whole will be up in 5 years. Many of you will invest, using Sterns system, or a fund, or some other means, and see your wealth grow in the next 5 years. I hope I do too.

But to credit a specific system with your success would be a big mistake, especially when the economy decides to tank again next time.

If you read through Stern's book, which is not easy reading by the way, you will find points at which he is more honest than other times. In several places he speaks of his methods as a cocktail. That's exactly what they are. He also talks about back testing, but later explains that the future is unpredictable. He's right. At times he says you invest at your own risk, and most of us don't understand risk. That's right too.

In short, you may get some wisdom out of this book, but don't bet the farm on it. Buyers and Sellers beware.

I have been eagerly awaiting this book for a while. Having read through the entire system, I am eager to put the principles into action. The problem is, the entire system revolves around running very particular stock screens that the author sets forth toward the end of the book. After a great deal of effort, I have found it impossible to set up stock screeners on the internet to run the particular screens from this book. I have tried MANY MANY publicly available screeners, including the ones that the author states will run these screens, and I have tried proprietary screeners from two brokerage accounts and my subscription research service. NO LUCK! In short, the stock screens set forth in this book are useless to the average person because there are no tools available for running the screens as written.

I'll give you an example. One element from the first (and supposedly most important screen) in the book is this: "5-year historic earnings growth >= 1.20 percent of the industry median (meaning 20 percent higher than the industry)."

If the screening tool you plan to use can't do this operation (and I am willing to bet that yours cannot) then don't waste your money on this book. You will waste your time reading "the system" in chapters 1-9, only to discover that the stock screens in chapter 10 and beyond cannot be run. Very disappointing and frustrating.

I found the investment model very compelling and within my reach as a beginning investor. The book requires some study but it is understandable. Adding a glossary with explanations of terms, especially terms that are used interchangeably, would have lifted this book a solid 5-star rating in my opinion.

Having just finished the book, I have implimented the first of the three systems laid out in here. I have turned a profit, so far. The best part of the book is having the systems explained in easy terms. The reasons for what, when, why and how much are, for EACH system, laid out in a step by step approach. You will know based on the current market condition, bullish, bearish or neutral, how to procede.

There are also simple rules to follow like "Don't out smart your system, Don't allow your profits to erode, Stick to your sell discipline, Keep it simple, Manage system 1 once a month, Manage system 2 every quarter" and so on. You are never left guessing.

You are guided in such a way that this will not take up your whole life. You are not going to be stuck looking at a screen for hours a day or per week. The point of having a system like this is to allow you to work the system only when you are told (monthly, quarterly etc.)and to get on with your life. We all have other areas that need our attention, kids, work, family, other obligations and so on. This book will allow for all of that.

A revewer had commented "there are no tools available for running the screens as written'. The EXACT screening tools for "Rising Stars" can be found at Zacks. Zacks is mentioned in the book on page 188. Yes, it should have been listed ahead of MSN and Yahoo (and more often). It has everything, word for word, to run your screen.

This book is a current and timely guide to investing with a simple basis -- to monthly examine 3 indicators to determine the direction of the market, and to adjust your behaviour to the situation. The strategy uses common stock screens without complex analysis to place the odds in your favor for any situation -- bull market, bubble, bear market, sector rotation, or news event are all potential windows of opportunity.

I like that the book gives you choices. The author describes possible measures and their strengths and weaknesses in each of the three areas, (such as price-to-earnings versus price-to-sales versus cash flow,) and says that the system is based on the movement so whichever you choose the important thing is to stick with that measure and to understand it. Similarly when it gets to ways to use the knowledge, you have choices in how to take action too.

I also like that the author explains where and how to easily get measures at many websites such as MSN, Yahoo, Morningstar, BLS, chartfilter, etcetera.

I did feel a bit *too* many choices were offered, that the author got a bit enthused showing too many aspects or stock market jargon seems to go off the main message for the common audience. And the "pounce" hunting metaphor gets a bit old after a while. Overall though, very very good ideas and very doable approach to investing !

Contents:

Book One : READY - Gather Your Resources

1. Assess Your Kingdom

2. Run with the Bulls, Pounce on the Herd

3. Animal Instincts

Book Two: AIM - Master Your three indicators

4. The Power of Three

5: Valuation

6. Economic Direction

7. Investor Psyche/ Market Direction

8. Bulls, Bears, and More Foolishness

9. Bubbles and Predators

Book Three: POUNCE - The personal Pounce platform

10. Core: Rising Stars and Pounce for Income and Growth

11. Tactical Investing: Top Gun

12. Hedge for All the Right Reasons: Uncorrelated/Hedge

13. Personal Pounce Platform

14. Pouncing into the Future

15. Pounce Rules

Had this book been more consistent or organized differently, I'd recommend it for the author's better points. He's trying to show that traders should spend their time doing homework and using a disciplined system. Using these ideas, there's no need to trade a lot, especially when you're taking profits from a rising market. My impression is this system won't work for a downward market or a sideways grinding one, but I can't know without testing it.

The beginning of the book promised more than was delivered in my view. It was about an approach to the market that tunes out the noise and involves little stress. Further and further into the book, the promise of the approach disappeared into the ether.